A doctor's office is considering the purchase of a new piece of equipment. The equipment costs $25,000. The procedure performed with the new equipment will be billed to patients at $200. The doctor's office estimates that the cost of materials and training for the new equipment will be approximately $75 per procedure. If the doctor's office estimates that demand for the procedure will be 100 procedures, what should the office do?
A) Purchase the equipment
B) Not purchase the equipment
C) Impossible to determine
D) Cannot be determined from the information given

Question

Quizplus · Accepted Answer

The total revenue from 100 procedures is $20,000 (100 procedures x $200). The total cost of materials and training is $7,500 (100 procedures x $75). The net revenue is $12,500 ($20,000 - $7,500), which is less than the equipment cost of $25,000. Therefore, the office should not purchase the equipment.

A Doctor's Office Is Considering the Purchase of a New